Equity tax buried deep in Obamacare

August 9, 2010

Freedom New Mexico

The 2,300-page health care reform bill was rushed through Congress without many people — even those who voted on it — knowing many of its details. As House Speaker Nancy Pelosi infamously put it in March, “(W)e have to pass the bill so that you can find out what is in it.”

Since then, like a time-release capsule, one surprise after another has bubbled to the surface.

One of the latest revelations is a 3.8-percent new tax on home sale “profits” when the equity pocketed by an individual seller exceeds $250,000 or $500,000 for a couple. We doubt many Americans for or against the health-care overhaul expected it also to result in paying an additional tax on top of the existing capital-gains tax when they sell their homes.

The stealth 3.8-percent tax is piled on top of the capital-gains tax, which is 15 percent for people in most tax brackets, but will increase next year to 20 percent.

A spokesman for Rep. Kevin Brady, R-Texas, who has analyzed the bill, said Obamacare adds the 3.8 percent “Medicare” tax on net investment income for taxpayers with adjusted gross incomes more than $200,000 for individuals or $250,000 for joint returns beginning in 2013.

The new tax also applies to “interest, dividends, annuities, royalties, rents, passive income” as well as “net capital gain from the disposition of non-business property,” including personal residences.

Perhaps the Obama administration justifies this additional burden as a tax on the “rich.” But across America, that definition will include penny-pinching homeowners who prudently paid down their mortgages, perhaps expecting to retire on the proceeds. Now, they’ll have 3.8 percent less of it, above the thresholds of $250,000 for individuals or $500,000 for joint filers, in order to help pay for Obamacare.